2021 Housing Market Review

REAL ESTATE

By Gary A. Miller

It comes as a shock to no one reading this article that 2021 was a hectic year for real estate.  When I wrote the real estate wrap-up for 2020, I noted how the year had been fast-paced and higher-priced.  2021 saw a continuation of those trends. Indeed, during this past year, the market was faster, the prices were higher, and the overall number of sales was up.

The table below compares the average sales prices in the zip codes of 27510, 27514, 27516, 27517, and 27707 within the boundaries of Orange County.  While typically I would focus on year-over-year numbers, below I am including 2019 to compare current activity with the pre-pandemic market.

2019 Average Sales Price	2020 Average Sales Price	2021 Average Sales Price
$446,581	$475,838	$534,936
2019 Median Sales Price	2020 Median Sales Price	2021 Median Sales Price
$439,038	$470,331	$473,000

As this table demonstrates, the average price in southern Orange County has tracked considerably higher since pre-pandemic times.  The median price increased by a smaller margin, which tells us that the most expensive homes are getting more expensive, but the mid-point of the market, while up almost $35,000, has increased less dramatically.

With all the talk about low inventory in 2021, it may come as a surprise that there were 1,234 closed transactions in southern Orange County.  This is the highest number of closed transactions within a calendar year in the last decade. The average annual number of closed transactions over that time period is 1,036.  This is notable in that it indicates the market was driven more by an increase in buyers than by a decrease in sellers.

Perhaps the last point should not surprise us, considering the historically-low mortgage rates experienced in 2021.  The chart below, provided by the governmental organization Freddie Mac, shows that rates were below 3.5 percent for much of the year, which is truly historically low.

At least two additional factors contributed to the greater number of buyers in the market.  The first factor is tied to the workforce, where a) the pandemic created more freedom of movement for many workers, many of whom relocated to the Triangle from more expensive states, and b) a number of high-profile employers expanded their presence in the area.  A second factor, which is difficult to quantify but certainly real, is that the pandemic prompted many to rethink their living space – buyers sought more room for work, school, and leisure.

Diving deeper into the data, we can see on the table below that there are some differences between the ZIP codes that make up southern Orange County.

27510	$374,768 Average sales price		$329,900 Median sales price
	19% Attached	22% Condo	58% Detached	0% Manufactured
27514	$564,285 Average sales price		$492,900 Median sales price
	7% Attached	26% Condo	67% Detached	<1% Manufactured
27516	$551,307 Average sales price		$532,500 Median sales price
	12% Attached	12% Condo	77% Detached	<1% Manufactured
27517	$540,139 Average sales price		$425,000 Median sales price
	13% Attached	22%  Condo	65% Detached	0% Manufactured
27707	$374,000 Average sales price*		$374,000 Median sales price
	0% Attached	0% Condo	100% Detached*	0% Manufactured

Percentages may not add to 100 due to rounding errors.

*Only one home sold in 27707 in 2021.

One thing that jumps out from this table is the relative affordability of Carrboro (27510) when compared to the other ZIP codes (excluding the single data point in 27707).  A quick analysis shows Carrboro prices around 34% lower than the rest of southern Orange County in 2021.  Home prices in Carrboro have been lower over the past several years, as well.  In 2018, Carrboro homes were 38% lower, in 2019 they were 32% lower, and in 2020 they were 29% lower than in other southern Orange County ZIP codes.

When considering affordability, it is useful to analyze the upper and lower ends of the sales price range for the entire area.  In 2021, 2.75% of transactions (34 homes) were for homes that sold for less than $100,000.  All these homes are condominiums, and around two-thirds of these sales took place in the Camelot Village neighborhood, portions of which lie in a FEMA special flood hazard area, zone AE. At the upper end of the price range, 7.77% of transactions (96 homes) were for homes that sold for more than $1,000,000, and these were distributed across more than 35 neighborhoods.

Although we cannot know what 2022 will bring, 20 economic and housing experts surveyed by the National Association of Realtors believe the housing market will “normalize” somewhat with slightly rising mortgage rates and a slowing of buyer activity.  It remains to be seen how this national perspective will compare with what we experience in our segment of Orange County.

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Gary A. Miller is co-owner of Red Bloom Realty.  He has lived and worked in Chapel Hill off and on since 1994 and is an avid musician, kayaker, traveler, and former educator.